European Scientific Journal September 2014 /SPECIAL/ edition Vol.2 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431 330 “ENTREPRENEURSHIP & NEW VENTURE CREATION” KEY ELEMENTS OF THE ENTREPRENEURIAL ECOSYSTEM FACILITATING THE GROWTH OF ICT ENTREPRENEURS IN ITALY Fabio Corno Richa Lal Stefano Colombo Milano-Bicocca University, Dept. of Sociology, Milan, Italy Abstract This exploratory study examines the perceptions of Italian entrepreneurs about their experiences with their own new venture creations in Italy. The study utilizes the Ecosystem approach to examine the drivers of entrepreneurship. Integrating the theory from economics, sociology, and psychology, we argue that both the individual personality traits and the environment impact entrepreneurial activity. We used a mixed method approach with in- depth interviews and surveys, followed by interviews with the Control Group. The findings suggest entrepreneurial spirit in Italy is high, and the socio-cultural environment is perceived as encouraging entrepreneurship. The business environment challenges confronting ICT entrepreneurs are related to government policies and programs, access to finance, perceived need for support towards knowledge and skill building and, finally, to exploring International markets. Theoretical and practical implications are discussed along with directions for future research. Keywords: Entrepreneurship, Italy, new venture creation, ICT Introduction Italy has a diversified industrial economy. The great strength of its economy lays in its vibrant small and medium firms, specializing both in high quality consumer goods and in high tech design and engineering products. Unfortunately, the global crisis has highlighted Italy‘s long-standing weaknesses. Its economy is currently suffering from a combination of intertwined difficulties that are fuelling each other: a poor underlying growth rate, high public debt, and limited lending power of its financial institutions. The average number of enterprises per thousand inhabitants is an important indicator of the degree of diffusion of private initiatives It, however, is also an aspect of the fragmentation of economic system: in Italy there are about 64 companies per thousand inhabitants, among the highest value Europe, reflecting mainly a prevalence of small enterprises (ISTAT 2012). The Italian economic system is characterized by the presence of a multitude of SME (95% of Italian Companies have less than 10 employees), many founded in the period of the ―Economic Miracle‖, when everything had to be rebuilt and many people had lost ever ything. Today this system, characterized by the claim "Small is Beautiful", is facing many challenges: the economic crisis, globalization, credit crunch, changes in the world trade and brought to you by CORE View metadata, citation and similar papers at core.ac.uk provided by European Scientific Journal (European Scientific Institute)
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European Scientific Journal September 2014 /SPECIAL/ edition Vol.2 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431
330
“ENTREPRENEURSHIP & NEW VENTURE CREATION”
KEY ELEMENTS OF THE ENTREPRENEURIAL
ECOSYSTEM FACILITATING THE GROWTH OF ICT
ENTREPRENEURS IN ITALY
Fabio Corno
Richa Lal
Stefano Colombo Milano-Bicocca University, Dept. of Sociology, Milan, Italy
Abstract This exploratory study examines the perceptions of Italian entrepreneurs about their
experiences with their own new venture creations in Italy. The study utilizes the Ecosystem
approach to examine the drivers of entrepreneurship. Integrating the theory from economics,
sociology, and psychology, we argue that both the individual personality traits and the
environment impact entrepreneurial activity. We used a mixed method approach with in-
depth interviews and surveys, followed by interviews with the Control Group. The findings
suggest entrepreneurial spirit in Italy is high, and the socio-cultural environment is perceived
as encouraging entrepreneurship. The business environment challenges confronting ICT
entrepreneurs are related to government policies and programs, access to finance, perceived
need for support towards knowledge and skill building and, finally, to exploring International
markets. Theoretical and practical implications are discussed along with directions for future
research.
Keywords: Entrepreneurship, Italy, new venture creation, ICT
Introduction
Italy has a diversified industrial economy. The great strength of its economy lays in its
vibrant small and medium firms, specializing both in high quality consumer goods and in
high tech design and engineering products.
Unfortunately, the global crisis has highlighted Italy‘s long-standing weaknesses. Its
economy is currently suffering from a combination of intertwined difficulties that are fuelling
each other: a poor underlying growth rate, high public debt, and limited lending power of its
financial institutions.
The average number of enterprises per thousand inhabitants is an important indicator
of the degree of diffusion of private initiatives It, however, is also an aspect of the
fragmentation of economic system: in Italy there are about 64 companies per thousand
inhabitants, among the highest value Europe, reflecting mainly a prevalence of small
enterprises (ISTAT 2012).
The Italian economic system is characterized by the presence of a multitude of SME
(95% of Italian Companies have less than 10 employees), many founded in the period of the
―Economic Miracle‖, when everything had to be rebuilt and many people had lost everything.
Today this system, characterized by the claim "Small is Beautiful", is facing many
challenges: the economic crisis, globalization, credit crunch, changes in the world trade and
brought to you by COREView metadata, citation and similar papers at core.ac.uk
provided by European Scientific Journal (European Scientific Institute)
Least favourable factors - Entrepreneurial opportunities for women and people in
certain age categories
Conclusions - Findings reflect that in Italy - the 9th largest economy in the world,
with 98% of the firms being small and medium enterprises - the socio-cultural environment
seems to supporting entrepreneurship by encouraging risk taking, creativity and innovation.
The same has been reinforced in the GEM 2008 Report for Italy.
State/govt. Policies and programs
Figure 4: Explains policy and program support offered by State to new firms
0%10%20%30%40%50%60%70%80%90%
100%
20% 6% 1% 11% 1% 16% 14%
41%49%
23%
47%38%
54% 53%
39% 46%
68%33%
57%12% 21%
0% 0% 9% 9% 5% 19% 12%
N.R.
High
Average
Low
0%
20%
40%
60%
80%
100%
Special government schemes & programs for start-ups Favourableness of overall government policies Favorableness of taxation system Ease of obtaining permits and licenses (VAT code, … etc.) Favourableness of physical, transportation and ICT Infrastructures
20% 17% 22% 17%3%
53%46%
49% 63%
58%
20% 31%26%
20%35%
7% 6% 3% 0% 3%
N.R.
High
Average
Low
European Scientific Journal September 2014 /SPECIAL/ edition Vol.2 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431
339
Most favourable factors - Physical and ICTinfrastructure
Least favourable factors - Special government programs and schemes for start-ups,
tax system, ease of obtaining licences and permits
Conclusions: government has reinforced Italy‘s commitment towards further
interventions aimed at rapidly simplifying and reducing time and costs involved to start up a
business, as well as at eliminating present digital divide. Administrative procedures for
enterprise creation are receiving substantial attention. Policy wise, in 2010, Italy has taken a
number of policy measures aimed at improving the environment for SMEs and at reducing
the administrative burden resulting from their interaction with the administration. Despite the
Government efforts in improving the scenario, most entrepreneurs still consider the current
reality far from satisfactory.
Access to finance
Figure 5: Explains the ease of Access to Finance
Most favourable factors - Availability of funds from family and friends,venture
capital and angel investors
Least favourable factors - Availability of bank loans and government subsidies
Conclusions - As revealed by our findings, in Italy financial institutions (commercial
banks in particular) generally do not develop specialized competencies and procedures to deal
with the financial needs of this category of entrepreneurs.
Most high-tech ICT start-ups perceive that it is not easy to have access to funding
from private equity, i.e. venture capital funds and angel investors. Presence of credit
constraints from banks is very worrisome, due to the key role allegedly played by these SMEs
in assuring innovation and growth in the economic system. Even though the findings should
be interpreted with caution due to the relatively small size of the sample, nevertheless they
provide an important insight into the existing financial scenario.
0%
20%
40%
60%
80%
100%
Availability of Government
subsidies
Availability of family/friends
funds
Availability of Venture Capital
Funds
Availability of funds from private individuals/Angel
funds
Availability of bank loans
43%10%
53% 47%33%
23%
36%
24% 35%37%
34%51%
12% 9% 22%
0% 3% 11% 9% 7%
N.R.
High
Average
Low
European Scientific Journal September 2014 /SPECIAL/ edition Vol.2 ISSN: 1857 – 7881 (Print) e - ISSN 1857- 7431
340
Access to information, opportunity for knowledge & skill building
Figure 6: Explains access to information, opportunity for knowledge and skill building provided by different
sources
Most favourable factors - Support from industry associations and to some extend
education system encouraging entrepreneurship.
Least favourable factors - Availability of formal training on entrepreneurship,
support from Universities, incubators and technology parks.
Conclusions - Development of scientific and entrepreneurship skills must be present
in the curriculum at educational institutions, especially if Italy wants entrepreneurs driven by
opportunity recognition, as opposed to necessity. Italy, being a EU member, is committed to
promoting the teaching of entrepreneurship in their education system. However, there is a
need of promoting these initiatives more systematically. Italy being an innovation-driven
economy (according to the GEM classification of countries), successful SMEs
entrepreneurship depends heavily on innovation and R&D. Young technology based SMEs
need increased support and collaboration for R&D and innovation from
Universities,technology parks, business incubators (OECD 2009, Science, Technology and
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